Reuters reports that Blizzard's troubles in China aren't over yet. The General Administration of Press and Publication (GAPP) regulator ordered the Chinese distributor of WoW to "suspend charging users to play the game, and disallow new account registrations". Activision shares promptly dropped 4.3% yesterday. But analysts said that "the Chinese market for World of Warcraft accounts for 5 to 6 cents a year of Activision's earnings", which is less than 10 percent.

This is a good opportunity to clarify something about numbers: It isn't the number of players that counts, but the amount of revenue from these players. Thus, if WoW China is shut down again, and World of Warcraft player numbers drop from 11 million to around 5 million again, this might look like a big drop. But as the 5 million players are contributing 90% of the revenue, while the 6 million Chinese players only contribute the remaining 10%, the actual impact is a lot smaller.

You have to be very careful with the numbers that companies announce. Champions Online recently announced 1 million ... characters created, not active subscribers. As this counts all the people who bought the game and quit since release, and also counts every player who created several characters multiple times, the "1 million" number gives a completely inaccurate picture of the success of Champions Online. The same thing is true with free Facebook games, like FarmVille having 60 million players: This counts everyone who ever signed up, played 5 minutes and left. And even from those who actively play, only a small minority pays anything. The company running these games is making millions in revenue, but compared to the billion dollar revenue of World of Warcraft that still isn't that impressive.

"he same thing is true with free Facebook games, like FarmVille having 60 million players: This counts everyone who ever signed up, played 5 minutes and left."

Clarification: If you are referring to data from sites like http://www.appdata.com/, they track MAU (monthly active users). So while someone could indeed make an account that month, play for 5 minutes, and quit, they would only count for that month.

Your overall point is well taken though. I just wanted to clarify that one point.

On the other hand, Chinese players pay by the hour, not by the month... in other words, it's far more likely that the 6 million Chinese players are the ones contributing 90% of the income, and not the 5 million US/EU players.

Of course, there are many other factors to consider, like exchange rate etc, but just thought you should know. Who are these 'analysts'? Also, the fact is that the Asian market for MMOs is far larger and profitable than the US/EU market, this is widely acknowledged by most industry experts.

True, big numbers don't automatically mean big bucks... but in this case I think your application is inappropriate--the big numbers of US/EU subscribers do not indicate they are the big bucks here. Blizzard should be very worried by the WoW suspension in China, and if the issue isn't resolved soon, expect further dips in ActiBlizz shares.

On the other hand, Chinese players pay by the hour, not by the month... in other words, it's far more likely that the 6 million Chinese players are the ones contributing 90% of the income, and not the 5 million US/EU players.

Absolutely not! Chinese players only pay about 5 US cents per hour, so they'd need to play 300 hours a month, 10 hours a day, to just pay the same as a US/EU player. And even then, the Chinese distributor NetEase is taking a part of the revenue, so Blizzard doesn't even get all of that money. Blizzard earns a *lot* less per Chinese player than per US/EU player. (Nothing to do with the fabeled Chinese gold farmers, as these don't play on Chinese servers anyway.)

Overall well put, as always. The Farmville numbers, however, where 56 million monthly active_ users and 20 million daily active users. Clearly that's not the same as 56 million subscribers but also not remotely in the league of Champions' "accounts created".

Its seems to me that the only people impressed with the "numbers" are the people who create them. Such as is the case with Funcom's "one million boxes shipped" to which I reply, "shipped were? Across the hall? Across the street? To you warehouse? No one truly knows the full extent of where the profit comes from other than the accountant preparing the profit and loss statement.

On the other hand, Chinese players pay by the hour, not by the month... in other words, it's far more likely that the 6 million Chinese players are the ones contributing 90% of the income, and not the 5 million US/EU players.

The actual latest half year figures for Blizzard Activision can be found here in their last filing to the SEC.

It shows that,for the 6 month period until 30th of June this year (page 36) that half year MMORPG revenues were $639m and accounted for 34% of the company's combined revenue. Of this $639m, for the six month period, $578m is directly attributed to Blizzard on page 34.

Now it gets a bit more complex, as we aren't given a detailed geographical breakdown of MMO revenue, just Activision Blizzards total revenue on page 35. For the combined company, in six months, Activision Blizzard has total revenues of $1,870m, of which $137m (about 7%) is from Asia Pacific.

That 7% includes though Console game sales from the Activison part of the company, and we aren't given a detailed further breakdown to say exactly what portion of the Asia Pacific $137m is MMO subscription fees.

A reasonable *estimate*, thus, would be to take the 34% contribution of Blizzard to the combined entity and take this (137x0.34) $46m figure (half year) to be the subscription net revenues for the company.

I think that's a reasonable estimate, and probably as close as anyone is going to get without internal company information or simply a better breakdown.

As such, the loss of China represents (is we double up for the year) around a $92m yearly loss in net revenue. Which sounds a lot, but if we double the 6 month net revenue figure on page 5 by 2 to give us an estimate of the yearly figure we can see that this is an estimated $92m decline in total revenues of around $4,038m.

While I'm sure the China situation is slightly annoying. Im sure it's not exactly going to break the bank of a company which cleared $384m in post tax profits in just 6 months of this year.

Should Activision have failed to express their friendship to the right authorities with expensive tokens of love? :)

This is me completely speculating, but I would't be shocked to hear that your comment isn't far off the mark Longasc.

Though (cough) facilitaton payments (cough) are something that many businesses don't like to be seen to be doing, in a number of business environments across the world these sorts of payments are simply what is done to get approval or to get your shipments through port etc.

While we may frown on this in the western world, and in many cases climb on our ethical high-horse, it is illogical to ignore the fact that this is how the world is in many countries. That a *pragmatic* company may need to adapt to the country's business environment to get the business done that it wants to get done.

I should clarify, the above statement is in no way condoneing by the way.

Now, the calc equation came to 120.05% of users at the time of posting (* WoW = 11,000,000 / 91,628 Xfire players = 120.05)...this was shortly after the 11 million player announcement from Blizzard.

Now, using this calc on Xfire players today I get

(58,332) multiply (x 120.05) =7,002,756 players.

Fascinating how this has dropped quite a bit.

This algorithm can be used all over the Xfire charts...so for example I played with Aion's numbers..

7,681 Xfire players x 120.05=922,104 players.

Which would be pretty close, as sales had been in the range of 1.2 to 1.5 million boxes. If you look at the charts on Xfire you can also see a steady decline of players, thus getting to this lower amount.

So, I wonder how this will roll day after day as long as it is shut down...and if it has any effect on Xfire (last I heard...it is usable in China...but is it used there?)

I see some fun data coming our way.

(PS: As a side note...I DO still play Age of Conan and if you want to see how ugly that got? Xfire today = 582 x 120.05Total = 69,869 players...and the game sure is feeling like that...hehe...yet look at DDO since going free...Xfire shows 1,922 players x120.5 = 230736...which would look VERY good for Turbine)

I bet you could sell your blog for a nice amount of cash. The purchase would necessarily have the stipulation of you not mentioning the purchase and maybe even continuing as a contributor to ensure the "voice" sounds the same.

I have no idea how much you could get, but I'd think with the right purchaser you could get your magic $100k (USD).

I wonder if Blizzard cares; they may be just going through the motions. As I recall, there were rumors that Blizzard didn't make much money off the deal with The9 because of corruption. On the other hand, net- and computer-savvy Chinese can roll on non-mainland servers (downloading and paying over the net), and one might speculate that Blizzard would make more money on those fewer subs than they would over many more players on mainland Chinese servers.